Tesco Launches New Discount Chain to Tackle Threat from Aldi, Lidl
19 September 2018 - 9:01PM
Dow Jones News
By Maryam Cockar
Tesco PLC (TSCO.LN) on Wednesday launched a new discount brand,
Jack's, in an effort to tackle growing competition from German
discount retailers Aldi and Lidl.
The U.K.'s biggest supermarket launched the new store in
Cambridgeshire, England and said it will open 10 to 15 Jack's
stores in the U.K. over the next six months.
The first two stores will open on Thursday in Chatteris,
Cambridgeshire and Immingham, Lincolnshire, on sites with excess
Tesco space. The stores to follow will include a mix of new sites,
sites near existing Tesco stores, and converted Tesco stores, the
company said.
The new chain is named after Tesco founder Jack Cohen, who Chief
Executive Dave Lewis said "championed value for customers and
changed the face of British shopping."
Tesco said Jack's will operate a business model "designed to
keep costs low and prices down" and that eight of 10 food-and-drink
products at Jack's will be made in Britain. The stores will also
stock an own-brand range under the Jack's logo.
Jack's is Tesco's bid to fend off growing competition from Aldi
and Lidl, who have a seen their share of the U.K. market grow
significantly. In the five years to September 2013 their combined
market share increased by 2.4 percentage points to 6.8% and in the
subsequent five years the two nearly doubled their share to 13.1%,
according Kantar Worldpanel.
Meanwhile, established grocers Tesco, J Sainsbury PLC (SBRY.LN)
and Wm. Morrison Supermarkets PLC (MRW.LN) have seen their market
share fall.
In a bid to strengthen its business, Sainsbury, the U.K.'s
second largest supermarket chain, has proposed an merging with
rival Asda Group Ltd., the U.K. arm of U.S. retail giant Walmart
Inc. (WMT).
Tesco, having recently bolstered its proposition with the
acquisition of wholesaler Booker Group, is ready for the next part
of its evolution, according to Russ Mould, investment director at
AJ Bell.
"At the moment [Tesco] is streets ahead of Sainsbury's, both in
market-share terms and strategically in the fight of the
supermarkets. And any major setback to the Sainsbury's-Asda deal
would certainly give Tesco another boost," Mr. Mould said.
Write to Maryam Cockar at maryam.cockar@dowjones.com
(END) Dow Jones Newswires
September 19, 2018 06:46 ET (10:46 GMT)
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